Free consult & free copy of book

E-Myth – “Why most small businesses don’t work & what to do about it”

Contact Us


Most 5 star CPA Google reviews in Canada

Read Reviews

Chartered Professional Accountants E Myth

1 Fixed Monthly Fee - Planning | Accounting | Taxes | Consulting

Helping Canadian businesses beat the odds!

Edmonton Tax Accountant | Incorporating For Tax Benefits

There are many ways that business owners can utilize small business tax rates in their business in order to increase the wealth that they have says Edmonton tax accountant. Business owners should know that highest personal tax rate in Alberta is currently 48%, which is the highest marginalized tax rate. That means almost half of all of the income that a person makes in their business, goes towards taxes. Business owners who take advantage of the small business tax rate, can save up to 37% in taxes because the small business tax rate number is 11%. In order for businesses to take advantage of this great read, they must incorporate their business, And they also must make no more than $500,000 in a year. Itís extremely beneficial for business owners to incorporate the business for the only reason of saving taxes.

Edmontons tax accountant says that there are many other benefits other than the saving taxes that business owners can enjoy going incorporating their business. Some of those benefits are limiting their liability in their corporation. Simply by incorporating their business, the corporation shoulders the most of the liability. In addition, incorporating a business will ensure that this protects the businesses tradename. Most entrepreneurs believe that simply by registering their name at the Registryís office, will protect their name legally, however Edmonton tax accountant says this is actually not true. By registering their name at the Registryís office, but acts as a placeholder for that name, but if a another business decides to incorporate using that tradename, they end up having greater legal rights to that tradename than the business owner who registered it in the first place. Simply by incorporating their business, business owners protect that tradename. In addition to those benefits, incorporating a business means that the business owner is more likely to qualify for financing in order to make asset purchases or leasehold improvements in the business. And in addition to making the business look more legitimate, many businesses will not hire unincorporated contractors. So by incorporating their business, they more likely to plan more jobs says EdmontonsTax Accountant.

This is why business owners should incorporate in order to take advantage of the small business tax rates, is that they can accumulate wealth much faster says Edmonton tax accountant. Itís actually one of the biggest reasons that business owners want to go into business for themselves, is to impact their future and be able to save more money. This can happen by paying less taxes, a business owner can take the same amount of money that are used to investing, and pay for less taxes on it, which means they can significantly accelerate how much wealth they accumulate in their investment portfolio.

These are some of the extremely good reasons why business owners should incorporate in order to take advantage of the small business tax rates and vastly change their future for the better says Edmonton tax accountant.

Many business owners incorporate their business in order to take advantage of small business tax rates says Edmontons tax accountant. By incorporating the business, they are more likely to save money in their business. The personal tax rate in Alberta is currently 40% of the highest, meanwhile the small business tax rate is only 11%. Entrepreneurs can save 37% in taxes simply by incorporating their business. Once they incorporate, business owners need to strategize with their accountant in order to utilize the corporate structure to minimize taxes in their business.

One of the best ways that they can do this says Edmonton tax accountant, is by being able to take out money of their business strategically. If they have a high profit year, they will be able to choose to withdraw the money out of their corporation in salary or dividends in a controlled way, in order to minimize the tax hit. If business owners have a huge year, or if theyíre planning on being absent for their business either for weddings, vacations or even maternity leave, business owners should be able to use corporate structure of corporations in order to take out money of the corporation in a controlled way that can minimize tax hits in their business.

Another extremely beneficial way that business owners can impact their wealth accumulation, is when they make investments in their retirement fund, by utilizing the small business tax rates and only paying 11% in taxes, they can use the same amount of money that they would normally be investing, they less taxes on it, but increase the amount of money they are putting into their investment portfolio. By doing this over several years, this can have a huge impact on how much more money the business owner can have accumulated their retirement fund. They can use the same strategy in order to eliminate their debt quicker, as well as save money faster. Once think this way, business owners should strategize with their accounting team in order to plan how theyíre going to achieve those goals.

In addition to a better tax rate, there are several other benefits to incorporating a business that can be seen on the cake says Edmontons tax accountant. In addition to limiting their liability by letting the corporation take on liability in their business, protecting their tradename, being able to qualify for loans more efficiently, giving their business legitimacy, and be able to be hired on at companies that will refuse to hire unincorporated contractors. These are all great secondary benefits that business owners can enjoy as being unincorporated business.

If business owners are incorporating specifically to get the tax benefits, they should be making $50,000 a year and a minimum says Edmonton tax accountant in order to break even. Once the business owner makes more money than that in a single year, they are spending more money on not being incorporated. Itís definitely a business ownerís best interest to incorporate their business once they make more than $50,000 in a year.